Well-Conceived Wage Plans Can Drive Efficiency and Productivity

Posted by sirserif in Wage and Hour | Comments Off on Well-Conceived Wage Plans Can Drive Efficiency and Productivity

A wage plan or structure may seem to be a straightforward component of the management of employees, but a plan that is carefully and fairly created will become a dynamic component of your company’s efficiency and productivity. That can result in happy employees and customers.

A well-conceived wage plan benefits employers when wage increases are based on employees’ productivity. This is the primary incentive that drives employees to do their jobs better and more efficiently. Employers also benefit from a wage plan that carefully matches job skills to each wage classification. Only then do employers know they are paying exactly what the job is worth, without overpaying.

A comprehensive wage plan also protects employees. They want to be assured that they are being fairly paid in comparison to workers at other companies doing the same job. They also want a detailed plan; so there are no ambiguities about promotions, wage increases, seniority and qualifications for additional benefits and bonuses. Employees will also want a guarantee of a minimum wage, so they can be assured of some level of income if, for example, a recession causes wage freezes, or even reductions.

A carefully developed wage plan can also benefit customers, which, in turn, is an advantage for employers and employees. Higher productivity and greater efficiency usually result in lower per-unit production costs; savings that can lead to lower consumer prices, which prompts customers to buy more product, thus increasing profits and wages.